The Operation Mode Analysis And Improvement Study Of The Cross-boarder Securitization In China

The Subordinated Debt Crisis in 2007 revealed to us that to study Cross-boarder Securitization further was of significance. Because it was the spreading channel of risk and it connected the interests of every side together. What's more, effective understanding of the process and essence of its operation affect to a large extent operation modes and strategies China participated in the international capital operation. The object of this paper's study is the spreading channel of this crisis: Cross-boarder Securitization. The purposes of this paper are to illustrate the Cross-boarder Securitization's process and essence, and to describe every steps of its operation as detailed as possible, including the study of the mathematical model of Asset-backed Securities, the Cross-boarder Securitization's strategies which are suitable to China and some proposals about the improvement of China's Cross-boarder Securitization's field and so on. Meanwhile, this paper also wants to exhibit a clear, systematic and overall Cross-boarder Securitization to the readers and to offer some help for the readers to understand some deep-seated problems spread by this crisis. The main body of this paper contains four parts.The first part generalizes ABS and its cross-boarder mode. First, it tells us the conceptual division and demonstration of the general ABS. Second, it also describes the general process of ABS, presenting the participants in ABS, and introducing the concept of"two directions", for illustrating the Cross-boarder Securitization much easier. At last, it puts forward the concept of Cross-boarder Securitization based on the general illustration of ABS, and analyzes the relationship between ABS and Cross-boarder Securitization, and the innovation of the latter's mode to the former one. What should be noticed is that the Cross-boarder Securitization is a special mode of ABS, and they have almost the same essence and the core meaning, while the difference is that the Cross-boarder Securitization is much more international, because it is a presentation of cross-boarder actions for pursuing the ABS's aims.The second part illustrates the process and steps of Cross-boarder Securitization with more details. First, by analyzing the present developing situation about the development of ABS in Asia-Pacific region, it gets a conclusion, that is Cross-boarder Securitization has been a mainstream mode of ABS in this region. Second, it emphasizes the introduction of three trade structures of ABS. They are Collateralized Debt, Pass-through Obligations and Pay-through Obligations. What's more, it analyzes the relationship and differences between them. Next, it discusses systematically about many matters of Cross-boarder Securitization, for example, the choices of asset, the SPV building, the credit enhancement and rating. At last, it demonstrates the field which can be chosen as a direction of development of Cross-boarder Securitization in China. Because the cause of this subordinated debt crisis is that there are some problems occurred in the payment from backed asset in the U.S., it is reasonable for us to have more discussions of the problem about the choices of asset when we are planning to carry out China's Cross-boarder Securitization.The third part is the most important part in this paper. It mainly studies the mathematical model of ABS and the former parts can be regarded as its theoretical basis. At first, it talks about the cash inflow and outflow of each participant in ABS when the mode of Asset-backed Securities is bond. It serves as a transmission to the model construction of the following part. Then, it sets a series of assumptions to help build the mathematical model. Most of these assumptions are the abstracts of reality, and the most important one is Efficient Market Hypothesis. Because the mathematical model in this paper is to illustrate the relationship between the economic variables in ABS, it only studies the theoretical model when the exchange structure is Pay-through Obligations and the mode of Asset-backed Securities is Zero Coupon Bond. Thirdly, based on the relative knowledge of Time-value Theory and the above assumptions, it uses the mathematical logic to obtain a theoretical model which can describe the relationship between the economic variables in ABS. What's more, it also establishes a link between the model and the reality to illustrate the economics explanations of the model. At last, it discusses the Withholding Tax's and Exchange Control's effects on Cross-boarder Securitization on the basis of this model and the mathematical logic. The model in this part is not the key-point of this paper, but the research process and methods of this model are the main ideas which fit the paper's purpose to let the readers understand clearly the essence and process of Cross-boarder Securitization.The last part demonstrates some improvement proposals about Cross-boarder Securitization resulting from the former demonstrations. These proposals are suitable to China's actual economic situations, and raise the assumptions of how to perfect and spread the Cross-boarder Securitization in China. At the last part, it reminds us what we have learned from the Subordinated Debt Crisis in 2007, and some problems needed to pay more attention when we participate in the international capital operation in the future.The current export of China is very active, the current account and capital account are both surplus, and the national economic environment is not under the pressure of fluid shortage, leading to no additional need for external financing, but the study and discussion of Cross-boarder Securitization being as a successful financing innovation and a new international financing instrument, is still very necessary nowadays. It not only touches the problems of China's financing innovation and financing diversification, but also affects the perfect of China's financial marketing and the progress of opening and internationalization. Meanwhile, it has crucial significance for preventing the national financial security problem such as Subordinated Debt Crisis. The author hopes that this paper can help the readers understand the Cross-boarder Securitization roundly and clearly from the view of the essence of operation.